Posted March. 07, 2009 07:44,
Fears over rising food prices are likely to escalate as the weakening won has driven up the prices of sugar and wheat flour sharply.
Korea`s top food processing company CJ Cheiljedang said yesterday that retail sugar prices will go up an average of 15.8 percent from Monday.
Accordingly, the factory price of white sugar will rise to 1,180 won (0.76 U.S. dollar) from 1,019 won (0.66 dollar) per kilogram. That of a 15-kilogram sack will increase to 15,097 won (9.74 dollars) from 13,036 (8.41 dollars).
The price hike is inevitable due to inflated purchasing costs stemming from the surging won-dollar exchange rate. We are also suffering from declining revenues in the wake of reduced sugar consumption amid the economic crisis, the company said.
Samyang is also reportedly considering the same measure and is expected to announce its implementation date and increased prices this month.
The wheat processing industry is experiencing a tremendous burden. Complying with a government measure to reduce inflationary pressure in July last year, the sector was forced to cut the wheat flour prices to the level of December 2007.
The prices of wheat imports, however, have since risen more than 20 percent, pressuring the industry to raise prices.
One industry source said, We have no specific plans yet for a price hike considering our intent to stabilize consumer prices. If things remain the same, however, we could find it difficult not to raise prices given our declining revenues since last year, hinting at a possible hike in prices.
With a series of confectionery and food firms planning price increases, the prices of snacks made with flour and sugar are likely to rise.
A Lotte Confectionary source said, With the won-dollar rate reaching nearly the 1,600 mark, we are spending 80 billion won (51.6 million dollars) more per year to buy raw food materials.
Other food industry sources said they will not immediately raise prices considering fragile consumer sentiment amid the economic downturn, but will have no choice if flour prices rise after those of sugar increase.